Cheap fracked gas killed the Kimberley gas hub

In what must be a dreadful irony for the environment movement, fracking is thought to be the final undoing for the project.

Damian Kelly

While protesters helped delay Woodside's gas project at James Price Point, it's believed another of their environmental concerns - fracking - delivered the final nail in the coffin, writes Sara Phillips.

The Premier of WA, Colin Barnett, must not be feeling too cheerful today. For years, he has wanted to open up the Kimberley, in the north of the state he was recently re-elected to govern for another four years, to mineral exploration and processing.

Jobs, he said, jobs for Western Australians. Wealth to be created. A legacy to be remembered by.

But today, Woodside and its partners have announced they will not be building a natural gas processing plant in the Kimberley. It was supposed to be the first step in the opening up of the Kimberley. First, bring in the energy, then the miners will follow.

Instead, the odds are shortening that Woodside will instead process the natural gas out at sea on a floating industrial complex.

The environment movement is celebrating. "Australians have woken up to the threats that mining and industrialisation pose to our environment and our communities, and resource companies need to start listening to their concerns or face the same sort of opposition that Woodside met in Broome," chirped Wilderness Society national director Lyndon Schneiders in a rapidly delivered press release.

Australian Conservation Foundation campaigner in the Kimberley, Wade Freeman, rejoiced, "This is not just the win for the pristine Kimberley coast [but for] the heritage-listed dinosaur track ways, migratory humpback whales, endangered bilbies and the monsoonal vine thickets. We need to understand that by working with industry and their investors we did influence this decision."

The environmentalists certainly played a role in the prevention of the gas hub. The project went from being a local issue in a far-away corner of Australia to one on the national agenda. Rallies and events were held in state capitals on the other side of the country. Big names such as Bob Brown and John Butler publicly decried the plan. Their fans listened.

The hardcore greenies out at Price's Point were instrumental as well. The delays, arrests, demonstration and conflict associated with their dogged protest slowed down all attempts to progress work at the site.

The environmentalists in front of their computers thousands of miles away were a part of it too. With lawsuits, submissions to reports, native title concerns and calls for inquiries, they retarded the lightning process Barnett so desperately wanted when he approved the gas processing licence in 2009.

However, in what must be a dreadful irony for the environment movement, it is fracking - that they elsewhere rail against - that is considered to be the final undoing for the project.

Commodities analyst and the chief economist of Barratt's Bulletin, Jonathan Barratt, told ABC News the dramatic slump in natural gas prices is to blame for Woodside's assessment that the project is no longer economically viable. This has occurred, he said, as US shale gas production has surged.

"When you've had a complete technology shift where we have so much supply, so many people trying to tap into the resource, then all of a sudden you have too much supply of the product," Barratt explained.

"Directly, through exports, or indirectly through its impact on other energy resources and their pricing, the US shale gas revolution will impact the economics of liquid natural gas and therefore the developers of existing LNG projects," he said.

Shale gas in the USA is often released by fracking in a similar way to coal seam gas in Australia.

The question now is whether the gas deposits that were to be exploited by this project will ever be tapped. Barnett was quite insistent that the gas be processed on the mainland. It was one of the conditions of approval for the licence.

And if gas prices continue to wallow pitifully because of the bountiful supplies coming from the US shale formations, then even the idea of a floating platform may prove too expensive.

It may be that the opposition of the environment movement delayed the project to a time when the gas was no longer the hot ticket that Barnett once envisaged.

Sara Phillips is the editor of the ABC's environmental portal. View her full profile here.